The inquiry follows a damning report last month by the Office of Fair Trading(OFT) that accused hospitals and surgeons of not publishing meaningful data as to their success rates.

It explained that without information such as infection rates it was impossible for patients and GPs to assess quality – a clear suppression of competition.

The OFT also alleged that the hospital groups made inflexible pricing arrangements with insurers. The aim of this was to exclude new hospital groups from breaking in to local provision.

Private medical insurers have long claimed that some private consultants routinely put their bank balances before their patients’ needs. They welcomed the decision of the OFT, following a year-long inquiry, to refer its findings to the watchdog.

Publication of the OFT report highlighted the friction between insurers and providers that has existed for years. Relations further deteriorated when Bupa, the leading medical insurance company in the UK and internationally, said 20p in the pound was being wasted on “inappropriate” surgery.

Dr Natalie-Jane Macdonald, managing director of Bupa Health and Wellbeing, said hospitals in Britain were half-empty. The implication was that they were spinning out treatment cycles and doing unwarranted tests and treatments to stay in business.

What is not disputed is that health insurance premiums have risen by about 10 per cent per annum for several years in the UK – and even more for expats buying international cover.

And while the problem of prolonging treatments, instituting unnecessary tests and putting patients through surgery when better options are overlooked is a big concern in Britain, the picture elsewhere in the world is often worse.

Carl Carter, chairman of the London-based association, said: “We are working among ourselves and with other industry bodies and databases to share information and combat provider fraud and inflated costs – for instance where hospitals are overcharging, charging for treatments they never did, or are overtreating, such as unnecessarily long admission periods.

“Many overseas doctors see an international medical insurance policy as their meal ticket and are keen to charge heavily inflated 'tourist’ rates for much more than they would charge a self-paying or local customer.”

Mr Carter, managing director of IMG Europe, told of a 35-year-old customer who suffered a nosebleed while in Tokyo. He attended a private hospital where the condition was viewed as extremely serious.

Doctors wanted to admit the man for 30 days, but the patient called his insurer. Mr Carter said: “Our medical team liaised with the treating doctor and we agreed to a three-day observation and to review after that.

“It turned out it was a simple case. By coincidence, with the mild concussion he also had high blood pressure and he had scratched inside his nose when he’d been jolted from behind and had fallen over.”

The case highlights the importance of policyholders contacting their insurance company in advance of treatment, emergencies excepted. Routine pre-authorisation is key to curbing abuse.

Mr Carter concluded: “Luckily, the customer followed the instructions on his membership card and all was fine. He made a full recovery and was quickly reunited with his family, and without his policy incurring the bill for 27 unnecessary days of in-patient stay.”

Last year, AxaPPP Internationallinked up with Medix, a global consultancy firm, to give policyholders the chance to take a second opinion before treatment. That is one defence against unnecessary treatment, argues Jonathan Gray, the company’s director of medical services. He also points out that patients may be saved from intrusive and potentially risky diagnostic tests and treatment.

“We recognise that over-treatment is a factor in provision of health care, whether in the UK or abroad. It varies according to the pressure on the providers,” he said. “In the Middle East, where doctors are mostly employed by the hospitals, there’s pressure on them to utilise the hospital facilities. That can lead to unnecessary diagnostics and treatments.”

But similarities occur in all countries. “Particularly with surgeons, a significant proportion of their remuneration is related to the procedures they do. So it’s in their financial interest, if they have the opportunity to justify medically that a procedure takes place, that it goes ahead.”

Mr Gray does not think that unethical practice is systemic in all countries. “We believe it’s a factor in all markets to varying degrees, depending on individual providers or specialists.”

AxaPPP has an anti-fraud team of six people who will investigate a suspect case and, if malpractice is established, will then investigate the whole hospital. Overtreatment is more difficult to detect. A second or third MRI scan in a straightforward case arouses suspicion.

“The key in all this is that additional interventions are not good for health outcomes,” Mr Gray said. The Medix scheme was “about getting people the right treatment for their condition in the right way – it saves the heartache of going through unnecessary procedures.”

One example was a patient who was about to undergo prostate removal, an operation often leading to long-term complications. He was spared surgery when a leading specialist in the US reviewed the tests.

Another insurer to set up an anti-fraud unit recently is InterGlobal. As for Bupa International, it is just as aghast as its UK partner at the relentless rise in premiums.

Sneh Khemka, medical director of Bupa International, points to the apparent readiness of some doctors to perform keyhole knee surgery without clinical need. “Doctors work on a reimbursement basis – the more they do, the more they get paid. In the UK, where we have been looking at the rates of knee arthroscopy, for example, the rate of operations in the privately insured market is almost three times that in the NHS.”

He continued: “One of the postulated reasons is that doctors may be incentivised to do a procedure that they would not otherwise do. That’s the UK situation, but in certain countries outside the UK, I’d say the situation is even more exaggerated.”

While UK doctors are well regulated, the same does not always apply elsewhere. “The standards and the regulations are not there,” he said. “That gives doctors freer licence to practise and that leads to inappropriate intervention.”

Dr Khemka – who has previously voiced a warning that private insurance would become unaffordable if trends continued – added that Bupa, because of its size, had a special responsibility to tackle the problem.

“We don’t want to keep members beholden to ever-rising premiums because hospital groups are charging way above what they should and trying to fill gaps in their capacity by overcharging – which is then directly transferred to individual private members.”

HOW INSURERS POLICE OVERTREATMENT

» Pre-authorisation: It is standard practice for insurers to insist that customers contact them before seeking treatment, except in emergencies. The UK-based body representing global insurers (AIMIP) advises: “The first requirement is clear documentation and membership cards and to always ensure that the insured person gets in touch with their medical insurance provider before getting the treatment or admission.”

» Case management: It is an advantage to have an insurance provider who has in-house medical teams and doctors available as well as a panel of medical specialists available for second opinions. “It’s unlikely that specialists will seek to overtreat if they know someone is monitoring their work,” says AIMIP.

» Information exchange between international insurers so that hospitals known to make fraudulent claims are boycotted.

» Dedicated anti-fraud units set up by insurers.

WHERE ARE THE WORST OFFENDERS?

Insurers mainly point to Asia, South America, the Middle East, Turkey and Spain. But no country is free of medical fraud. Generally, Europe is less infected with the culture of overtreatment because regulation of the medical profession is tighter.

Carl Carter, chairman of AIMIP, says: “Due to very little competition, certain hospitals in China, Hong Kong and elsewhere in Asia are charging exceptionally high rates to expats who are demanding US- or EU-style private hospital facilities when perfectly adequate modern local facilities are also available.

“Among other major offenders are Turkish hospitals and clinics, for trying to admit people when not required, as well as some of the tourist hospitals in Spain for charging 'tourist’ rates to expats.

“It’s not just these areas. In many parts of the world it is common practice for some hospitals and clinics to have a different rate for locals, expats and the tourists.”